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I sold a house that I owned in May 2014. This property was bought five years ago. I made a capital gain (FY2014-2015) from the transaction. I am a senior citizen and even with the capital gains, my total income for FY14-15 will be below the maximum amount not chargeable to tax (i.e. ₹2,50,000). Am I still required to pay tax on the above capital gains?
- S Pandian
As per the provisions of the Income Tax Act, where the total income of an assessee includes any income arising from the transfer of a long-term capital asset (an asset that is held for more than 36 months), such long-term capital gain shall be taxed at a flat rate of 20 per cent (excluding surcharge and education cess).
In case the total income as reduced by such long-term capital gains is below the basic exemption limit (i.e. ₹2,50,000 in case of an assessee aged between 60 to 79 years), then such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the basic exemption limit. The tax on the balance of such long-term capital gains shall be at the rate of 20 per cent (excluding surcharge and education cess).
In your case, your total income, including long-term capital gain, from the sale of your house is lower than the maximum amount not chargeable to tax, so you are not required to pay tax on such long-term capital gain.
The writer is a practising chartered accountant. Send your queries to >taxtalk@thehindu.co.in
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